1. Tony Rodgers, Director Arizona Health Care Cost Containment System Tony Rodgers, Director Arizona Health Care Cost Containment System The Perfect Storm

2. Arizona Health Care Cost Containment System AHCCCS Administration Product Lines - Acute Care - Long Term Care - Healthcare Group Acute Health Plans LTC Program Contractors State Agencies  DHS ·Behavioral Health  DES ·Eligibility Fee-For-Service  Native Americans  Illegal Immigrants Policy Eligibility (Special Populations) Monitor Care and Financial Viability Information Services Budget and Claims Processing Legal Intergovernmental Relations MCO Contract Management Funding Federal State County Private  Premiums Grants Rate Setting and medical cost management Assuring quality of care and heath outcomes

3. Arizona Population Trends Second Fastest growing State Second Fastest growing State Large Hispanic and Native American populations Large Hispanic and Native American populations Arizona’s Elderly population is Larger than Average Arizona’s Elderly population is Larger than Average Arizona’s Elderly Population is Growing Rapidly Arizona’s Elderly Population is Growing Rapidly

4. AHCCCS Enrollment by Program KidsCare 49,148ALTCS 39,709 Medicare Cost Sharing 20,137Healthcare Group 11,734 Freedom to Work 542Breast and Cervical Cancer Treatment Program 71 Acute Care 916,546

5. Growth in ALTCS Enrollment (2000 - 2004)

6. ALTCS Arizona’s version of Long Term Care Medicaid HCBS Nursing Facility ICF/MR (DD only) Hospice Acute Care Services Behavioral Health ALTCS Program Contractor Potential ALTCS Member PCP/ Case Manager Eligibility Financial/Medical ARIZONA LONG TERM CARE SYSTEM ARIZONA LONG TERM CARE SYSTEM Current Long Term Care System

7. Arizona’s dual eligible population Dual Eligible Enrollment in managed care health plans Dual Eligible Enrollment in managed care health plans –Total Duals = 76,723 22,084 in Arizona LTC System 22,084 in Arizona LTC System 54,639 Acute Care System 54,639 Acute Care System 10,219 Behavioral Health 10,219 Behavioral Health Pharmacy Spending (2003) Pharmacy Spending (2003) –Total spent = $ 256 m Acute Care $ 159 m Acute Care $ 159 m Behavioral Health $50 m Behavioral Health $50 m Arizona LTC $45 m Arizona LTC $45 m Medical Cost Medi/Medi Medical Cost Medi/Medi –Acute Care $60.5m –Arizona LTC elderly poor $47.7m –Arizona Dev Disabled $2.5m –Behavioral Health $19.26

8. AHCCCS Roles and Values In Serving Arizona’s Elderly AHCCCS employees located throughout the state determine financial and medical eligibility AHCCCS employees located throughout the state determine financial and medical eligibility Provides for consistent application of medical eligibility standards for vulnerable population. Provides for consistent application of medical eligibility standards for vulnerable population. Member focused and family-centered philosophies are critical characteristics of the Arizona Long Term Care System services and policies Member focused and family-centered philosophies are critical characteristics of the Arizona Long Term Care System services and policies

9. Current Medicaid-Medicare Coordination 84% E/PD have Medicare 84% E/PD have Medicare Only one plan currently qualifies as a Medicare Advantage health plan so it can manage both the Medicare and Medicaid capitation Only one plan currently qualifies as a Medicare Advantage health plan so it can manage both the Medicare and Medicaid capitation Medicaid and Medicare FFS members must stay in ALTCS MCO network Medicaid and Medicare FFS members must stay in ALTCS MCO network Challenges with coordination of benefits Challenges with coordination of benefits MCOs are responsible for coordinating benefits which is difficult without sharing information between plans or Medicare FFS MCOs are responsible for coordinating benefits which is difficult without sharing information between plans or Medicare FFS It is a challenge to coordinate the care and provide disease management services to Dual-Eligible members especially if they are in Medicare Advantage It is a challenge to coordinate the care and provide disease management services to Dual-Eligible members especially if they are in Medicare Advantage Getting necessary medical management information from CMS is difficult and untimely Getting necessary medical management information from CMS is difficult and untimely Member satisfaction with this fragmented system is low and effecting member compliance to medical regiments Member satisfaction with this fragmented system is low and effecting member compliance to medical regiments

10. Coordination of Eligibility Premium and Cost Sharing for Low-Income Individuals Premium and Cost Sharing for Low-Income Individuals – Inconsistencies need to be changed to make eligibility determinations more streamlined –Resource limits: considering SSI or spouse’s resource –Social Security Administration give full responsibility for determining low-income eligibility for Medicaid and Medicare Cost Saving Program recipients to States Dramatic Premium increase impact State’s budget- AZ growth in Title XIX and Title XXI: $60 million in supplemental needed in 2006 Dramatic Premium increase impact State’s budget- AZ growth in Title XIX and Title XXI: $60 million in supplemental needed in 2006

11. Coordination of Enrollment Currently, Part D is an Unfunded Mandate Currently, Part D is an Unfunded Mandate Will stretch tight administrative budgets- a 50% match does not relieve state from requirement of new state matching funds Will stretch tight administrative budgets- a 50% match does not relieve state from requirement of new state matching funds State budgets are still a challenge- AZ growth in Title XIX and Title XXI causing request for $60 million in supplemental State budgets are still a challenge- AZ growth in Title XIX and Title XXI causing request for $60 million in supplemental States are not budgeted for outreach and mailings to Medicare beneficiaries States are not budgeted for outreach and mailings to Medicare beneficiaries

12. Coordination of Pharmacy Creation of separate PBM Creation of separate PBM Exclusion of barbiturates and benzodiazepines from Part D coverage Exclusion of barbiturates and benzodiazepines from Part D coverage Generic Drugs need to be included in the definition of a covered Part D drug Generic Drugs need to be included in the definition of a covered Part D drug

13. What Was Congress Thinking? Did they really intend to take states out of the role of helping Medicaid/Medicare beneficiaries? Did they really intend to take states out of the role of helping Medicaid/Medicare beneficiaries? Did congress believe that States were the weaker partner in the Medi/Medi program “Medicaid is bad”- “Medicare is better”? Did congress believe that States were the weaker partner in the Medi/Medi program “Medicaid is bad”- “Medicare is better”? What role did congress expect the states to play in the future? No clear direction in the law. What role did congress expect the states to play in the future? No clear direction in the law.

14. Organizational Biases at CMS CMS Medicare: What they are really thinking …. CMS Medicare: What they are really thinking …. –View Medicare as Mainstream health care –View Medicaid Managed Care as non-mainstream health care delivery using primarily safety net providers –Medicare has standardized program benefits and services - expects states to adapt to CMS (top-down approach) –Only two models of delivering care- commercial health plan or fee for service –Less tolerant of flexibility –Medicaid service delivery differs by state so difficult for CMS Medicare to deal with –States aren’t good managers of Medicaid dollars so they won’t be good managers of Medicare dollars

15. CMS Medicare organizational biases impact policy formulation Formula used for “clawback” Formula used for “clawback” –Punishes states who are outliers –Medicare cost-sharing premium increases The role states will play serving the dual eligible population in the future The role states will play serving the dual eligible population in the future States role in eligibility/enrollment and providing information States role in eligibility/enrollment and providing information Member assistance services and grievance management Member assistance services and grievance management

16. Transition Issues Transition Issues New policies, rules and regulations – not consistent between both Medicare and Medicaid and who knows what the pharmacy benefit administration will be like New policies, rules and regulations – not consistent between both Medicare and Medicaid and who knows what the pharmacy benefit administration will be like Tyranny of Time – Aggressive Implementation: No time to work through issues Tyranny of Time – Aggressive Implementation: No time to work through issues MMA Not the only Health Care Issue for States; continuing state budget deficits and growth in Title XIX and Title XXI. MMA Not the only Health Care Issue for States; continuing state budget deficits and growth in Title XIX and Title XXI.

17. The “storm of issues” that must be addressed for successful implementation of MMA in Arizona Coordination of Coverage and Eligibility Coordination of Coverage and Eligibility –Who will do eligibility screening? –How will AHCCCS plans coordinate coverage issues? Coordination of pharmacy benefit with Medicaid MCOs and behavioral health plans Coordination of pharmacy benefit with Medicaid MCOs and behavioral health plans Enrollment to MMA plans or FFS Enrollment to MMA plans or FFS Sharing of medical management information Sharing of medical management information